UNDERSTANDING BRANDS â€“ INTRODUCTION:Functions of Brand Management, Sales forecast, Brand plan

INTRODUCTION:Brand Value and Power, Generate Profits and Build Brand Equity >>

Brand Management (MKT624)

Lesson 1

UNDERSTANDING BRANDS INTRODUCTION

Brand management as one of the marketing functions has been around for as long as we have

known professional marketing.

But, it has been a part of the traditional marketing approach in which many functions of today's

brand management were performed in a spread out fashion by the marketing manager and a

combination of his team members like the sales manager, the advertising and communications

manager, and the marketing administration manager to name a few. The terminology of brand

management was not used.

Brand management, in its present integrated form, has come into limelight and focus over the

last 20 years. The functional execution has undergone transformation in terms of its description

as a substantive job under one head. This implies that the overall functions of brand

management are full of substance and therefore are described specifically under the head -

brand management and not as disparate parts of the overall marketing functions.

In other words, brand management has not lost its primary roots that are well-entrenched in

marketing; it only has acquired explicitly defined dimensions within which the function

operates.

To further elucidate the point, there have been functional adjustments within the overall

marketing functions only to bring into clear and sharp focus the specific functions and job of

brand management.

Brand management now presents itself as a distinct part of an integrated marketing approach in

which it connects with all the touch points within and outside of the marketing department.

The whole concept can be exemplified by seeking your attention toward two fruit baskets; one

full of mixed fruits and the other having compartments carrying different fruits of each type in

each compartment. Each type comes into a sharper focus! So do the touch points.

This course is going to give you a clear understanding of what a brand is, why and how it is

managed, and what are the dynamics involved in managing brands in the present day

competitive market.

What is a Brand and Brand Management?

We all know from our study of the basic marketing course and also as consumers that a brand is

"a name, term, sign, symbol, design, or a combination of them intended to differentiate one

product from those of the competitors".

Perhaps, the most distinctive professional skills of marketing persons are their abilities to

create, maintain, and protect a brand in a hostile market. These abilities call for a collective

input on part of all within the marketing department and other departments.

Brand creation, therefore, is the end product of a team of professionals and not just one person.

It is a team effort. If the art of conceptualizing the brand rests with marketing, then the actual

creation of it is the cornerstone of the overall company team.

How Brand Management Came into Being?

We also know that brands have been around for as long as we can look back into the modern

business management. However, we need to have a distinct understanding of how brand

management came into being in its present form.

Over the decades as businesses and competition grew, in case of multinational corporations in

particular, the growth of brands exploded. With economic growth and the technological

advances of the later half of the 20th century in particular, various industries ranging from the

areas of foods to pharmaceuticals to textiles to cars to electronics and many other registered

impressive growth.

Brand Management (MKT624)

Growth of industries attracted more players, who along with the existing ones felt the

need to make their presence felt by way of differentiating their products from each

other. Hence, the drive toward brand management got progressive impetus.

· The more competitive the markets became, the more they tried to get into the areas of

distinction and differentiation and created conditions worthy of sophisticated

management techniques. Hence, the emphasis on brand management became

increasingly evident.

· The stronger the brands emerged, the higher the value they created for the company and

led businesses into diversified areas, and hence, brand management became ever more

obvious and sophisticated.

Growth, however, is not something that takes place overnight. A tremendous effort in terms of

time and money is required. Despite the effort, results do not stand guaranteed.

To cope with that possibility, companies tried to acquire brands from each other instead of

creating their own. The practice is still on. Also, growth took place not only within the same

category, but also across categories. Growth across categories owed to strength of brands. This

implies that a strong brand with high loyalty offers its company the temptation to get into

another category (for example, from milk to juices) with higher chances of success.

Whether it was only one product category or diversified product categories, the amount of

activities dictated that all product categories be managed separately. Various areas or markets

in which different corporations were dealing (for example, a company could be producing or

trading products ranging from detergents to foods to personal care) made it imperative for those

corporations to bring every single category in the first place and brand/s in the second under

acute scrutiny for better management.

It became clear to corporations that to bring the marketing effort relating different brands into a

sharp focus, they needed to have different people (brand managers) looking after different

brands.

Empirical evidence has it that professionals working across product categories tend to lose

focus, make less-than-highly qualitative decisions, and in the end hurt the products and brands,

making the whole process either less profitable or even a loss-bearing-proposition.

Conversely, especially designated managers, who have the sole responsibility of managing

their designated brands, can concentrate on developing a cost-effective marketing-mix for the

brands they are responsible for. The attached figures 1 and 2 illustrate the evolution of the layer

of product and brand management, with the passage of time.

First, the product(s) was brought into focus and put under the charge of a product manager. As

an example, one product manager dealt with all the brands of biscuits. Competitive pressures

demanded more sophistication and gradually paved the way for management of each brand by a

separate manager. Each manager took the role of a brand manager. This is how brand

management took shape. And, this is the way it drives brands of today.

The figures clarify that product and brand management is practical when a company is dealing

in more than one product category or more than one brand within one category.

It is also obvious that product and brand management does not replace the traditional functional

structure. It merely adds more layers to the organization for the purpose of improving

functionality. Brand management, therefore, is a function of the marketing effort and not a

substitute to it. Refer to figure 3.

Brand Management (MKT624)

Traditional Functional

Structure

Figure 1

Marketing Manager

Marketing

Communications

Administration

Sales Manager

Manager

Figure 2

Brand Management (MKT624)

Functions of Brand Management

While performing the core functions of brand management, brand managers:

· Develop long range competitive

strategy for success of the brand.

All tactical moves that form part

Long-term

of the strategy are formulated for

Strategy

execution by relevant personnel

of the company.

Identify

· Prepare in coordination with Sales Forecast

opportunities -

Budgets

sales personnel sales forecasts

Improve'ts

and dovetail the same into

marketing plans and budgets.

Sales forecasts serve as the basic

Brand

denominator of all budgetary

Management

figures, which are divided and

sub-divided into small pieces to

Gather

be achieved by different

Intelligence on

Work with Ad

personnel

different

Brand

Agencies

departments.

Perform'ce

· Work with advertising and other

Support from

related agencies (promotional

Sales Force

and research) to develop

and Trade

advertising copy, communication

Figure 3

strategies,

and

plans

for

execution of advertising and promotional campaigns.

· Stimulate support of the brand among the sales force and trade members (distributors,

wholesalers, and retailers) through communicating lucidly all the rationale for brand

plan.

· Gather intelligence on the brand's performance to see how the brand stacks up against

competition, customer and trade attitudes develop and change, and new problems and

opportunities arise. Identification of problems, their solutions and further improvements

are part of the function that keeps brand managers busy for most of the time.

· Meet changing market needs through improving and initiating new products/brands.

This function is an extension of the preceding one and, as mentioned, cannot be

performed convincingly unless problems are identified and changing needs pinpointed.

Why so much talk about brand management?

What is the background of so much talk about brand management? As and when competition

among products in various categories of consumer items intensified, it made the question of

"how to grow business?" larger and larger for business managers.

We have to remember there are only two ways to grow your business, namely

· Through organic growth

· Through acquisitions

As the markets grew more and more mature (western markets), the route to growth through

organic means went from tough to tougher. The lower rate of category growth, intensified

competition, well-established consumer preferences, and a host of other factors made it tough

for businesses to invest into organic growth mechanism and wait for results over an extended

period of time.

Brand Management (MKT624)

That paved the way for the other optional route, that is, through acquisitions. Business

managers found it more business-savvy and prudent to start buying existing businesses with

strong brand names.

Why? This owed to the simple reason that strong brands assured long term earnings, healthy

cash flows, and, hence, attractive bottom lines. It was in this background that the 1980s

witnessed a lot of activity in terms of buying and selling of businesses.

The cash rich and financially strong companies were willing to buy (and still are) the intended

target companies at a price many times more than the value of their stocks and price earnings.

The happenings on that front were dramatic. The prices paid were astronomical; the intention

was to buy an established company and own its strong brand.1

What really drove the business managers to be that aggressive was the potential they saw in the

brands that could generate high earnings, positive cash flows, and good profitability on a

consistent basis.

The businesses that were being acquired confirmed their realization that the real value of their

businesses did not lie in plants, buildings, and machinery; it rather lay outside the tangible

domain of their business, into the value of their brand, meaning into the minds of their potential

customers.2 And that is precisely what acquirers buy positions in the mind of potential

consumers.

That awareness took strong roots in the 1980s and it has given brands a new financial

dimension in terms of their value; that value is reflected in balance sheets of the companies as

brand's financial value or equity.

Organic growth or inorganic (through acquisitions), what is important is the fact that brands

must be sustained in a competitive and hostile environment regardless of who owns them, at

any particular point in time!

We shall realize the importance of sustaining brands as we go along the course by looking into

the background of developments in the area of brand management.

The understanding of the background in light of market dynamics will throw light on the

variables that play their role in making brands strong and stronger. We shall see that it is not

just a few mechanical steps that lay the foundation for good brand management; it also is the

perpetual existence of a compatible brand-based organization that makes leveraging of the

brand possible. It is the commitment on part of all in the organization that good things happen

to brands.

A realistic understanding on part of the management and staff paves the way for deciding

whether to strengthen an existing own brand, refresh it, develop a new one, or acquire someone

else's strong brand.

Existing or new, own or acquired, managers face challenges on the road to brand management.

You, as brand management students, will visualize and understand the challenges, and have a

good grip of the tools at your disposal to meet the challenges and beat them for leveraging your

brands.

Brand Management (MKT624)

Glossary of terms

Category: A category is a collection of similar competitive branded products that have more or

less the same features. If there are three players in the area of packaged yogurt, then the

respective brands of those three players form the category. The total number of brands may

exceed three, however. If imported brands also start making inroads into the market, then they

also add to the category.

Sales forecast: An estimate of future demand. Different brands have different forecasts.

Budgets: A summary of probable expenditures and income for a given period (usually a year),

embodying a systematic plan for meeting expenses.

Copy: An expression which refers to all the information that we communicate through the ads

to our customers. In case it is a TV commercial, you call that the "story board", but the "SB"

also draws its essence from the copy of advertising.

Brand plan: It is a planning document that reflects your extensive efforts toward defining the

market, analyzing it, and considering all the elements of brand management. It is very strategic

in nature and you should be able to develop one by the time you finish the course.

Organic growth: Business growth that takes place because of the internal working of the

organisms (different parts) within an organization. The term is used as against growth that

emerges as a result of acquisition of a running business.

Bottom line: The last line of the profit and loss account showing net profit or loss.

Stocks: The capital or fund that a corporation raises through the sale of shares; the shares that

each shareholder possesses.

Leverage: An advantage that comes through a certain action. In the context of branding, it is

the use of various marketing tools to bring your brand to an advantageous position.

Bibliography:

Jean-Noel Kapferer: Strategic Brand Management Creating and Sustaining Brand

Equity Long Term, Kogan Page (15-18)

Jean-Noel Kapferer: Strategic Brand Management Creating and Sustaining Brand

Equity Long Term, Kogan Page (15-18)

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